Britain’s second-largest supermarket chain J Sainsbury PLC (LSE:SBRY) posted a confident set of grocery sales figures for the first half of its financial year which managed to offset unflattering trends in its other major segments.
Argos' sales were down 5% year on year during the period, while merchandise and clothing fell 1.5%. Lower wholesale fuel prices caused forecourt sales to fall 4.4%.
“Our grocery volume growth has delivered strong profit leverage at Sainsbury's, partially offset by a tough first quarter at Argos,” said chief executive Simon Roberts.
Roberts pointed out that Argos trading improved through the second quarter and in more recent weeks, “so we continue to expect to deliver strong retail underlying operating profit growth and free cash flow generation for the full year”.
On the bottom line, profit after tax more than halved, but this was primarily due to the partial disposal of its financial services portfolio to NatWest.
On an adjusted basis, profit before tax added 4.7% year on year to £356 million.
Sainsbury’s is targeting full-year retail underlying operating profit of between £1.01 billion and £1.06 billion.
An interim dividend of 3.9p per share and a £200 million share buyback was declared.